________________________ RESERVE BANK OF INDIA
___________________ www.rbi.org.inRBI/2012-13/68 DBOD.
No.Dir.BC.3/13.03.00/ 2012-13 July 2, 2012 Ashadha 11, 1934,
(Saka)
All Scheduled Commercial Banks (excluding RRBs) Dear Sir / Madam
Master Circular Exposure Norms Please refer to the Master Circular
DBOD No. Dir. BC. 7/13.03.00/2011-12 dated July 1, 2011
consolidating the instructions / guidelines issued to banks till
that date relating to Exposure Norms. The Master Circular has been
suitably updated by incorporating the instructions issued up to
June 30, 2012 and has also been placed on the RBI website
(http://www.rbi.org.in). A copy of the Master Circular is enclosed.
Yours faithfully
(Sudha Damodar) Chief General Manager Encl: as above
CONTENTS , , 13 , , , 400001 DEPARTMENT OF BANKING OPERATIONS
& DEVELOPMENT 13th Floor, NCOB,Shahid Bhagat Singh Marg, Fort,
MUMBAI- 400001
FAX NO. 0091-22-22701241 Tel. No.022-22601000 E-mail address
[email protected] ,
Para No. A B C D 1 2 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.2 2.2.1 2.2.2
2.2.3 2.3 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.3.6 2.3.7 2.3.8 2.4 2.4.1
2.4.2 2.4.3 2.4.4 2.4.5 2.4.6 2.4.7 2.4.8 2.4.9 2.4.10 2.4.11
2.4.12 2.4.13 2.4.14 2.4.15
Particulars Purpose Classification Previous instructions
Application Introduction Guidelines Credit Exposures to Individual
/ Group Borrowers Ceilings Exemptions Definitions Review Credit
Exposure to Industry and Certain Sectors Internal Exposure Limits
Exposure to Leasing, Hire Purchase and Factoring Services Exposure
to Indian JVs / Wholly Owned Subsidiaries Abroad and Overseas
Step-Down Subsidiaries of Indian Corporates Banks' Exposure to
Capital Markets Components of Capital Market Exposure (CME)
Irrevocable Payment Commitments Limits on Banks Exposure to Capital
Markets Definition of Net Worth Items excluded from Capital Market
Exposure Computation of exposure Intra-day Exposures Enhancement in
limits Financing of equities and investments in shares Advances
against shares to individuals Financing of Initial Public Offerings
(IPOs) Bank finance to assist employees to buy shares of their own
companies Advances against shares to Stock Brokers & Market
Makers Bank financing to individuals against shares to joint
holders or third party beneficiaries Advances against units of
mutual funds Advances to other borrowers against
shares/debentures/bonds Bank Loans for Financing Promoters'
Contributions Bridge Loans Investments in Venture Capital Funds
(VCFs) Margins on advances against shares/ issue of guarantees
Disinvestment programme of the Government of India a. Financing for
Acquisition of Equity in Overseas Companies b. Refinance Scheme of
Export Import Bank of India (EXIM Bank) Arbitrage Operations Margin
Tradingii
Page No. 1 1 1 1 2 2 2 2 3 4 7 7 7 9 9 10 10 11
12 13 13 14 14 14 14 14 15 15 15 16 16 16 17 17 17 17 18 18 18
19
DBOD MC on Exposure Norms - 2012
2.5 2.5.1 2.5.2 2.5.3 2.5.4 2.6 2.7 2.8 A B 2.9 2.10 2.10.1
2.10.2 Annex 1 Annex 2 Annex 3 Appendix
Risk Management and Internal Control System Investment Policy
Investment Committee Risk Management Audit Committee Valuation and
Disclosure Cross holding of capital among banks / financial
institutions Margin Requirements Banks' Exposure to Commodity
Markets Banks exposure in respect of Currency Derivatives segment
Limits on exposure to unsecured guarantees and unsecured advances
'Safety Net' Schemes for Public Issues of Shares, Debentures, etc.
'Safety Net' Schemes Provision of buy back facilities Definition of
infrastructure lending and list of items included under
infrastructure sector List of All-India Financial Institutions
guaranteeing bonds of corporate List of All-India Financial
Institutions whose instruments are exempted from Capital Market
Exposure ceiling List of circulars consolidated
19 19 19 20 20 20 21 21 21 21 22 22 22 23 24 25 26 27
iii DBOD MC on Exposure Norms - 2012
MASTER CIRCULAR ON EXPOSURE NORMS A. Purpose
This Master Circular provides a framework of the
rules/regulations/instructions issued by the Reserve Bank of India
to Scheduled Commercial Banks relating to credit exposure limits
for individual / group borrowers and credit exposure to specific
industry or sectors, and the capital market exposure of banks. B.
Classification
A statutory guideline issued by the Reserve Bank in exercise of
the powers conferred by the Banking Regulation Act, 1949. C.
Previous instructions
This Master Circular consolidates and updates the instructions
on the above subject contained in the circulars listed in Appendix.
D. Application
To all scheduled commercial banks, excluding Regional Rural
Banks. Structure 1 2 INTRODUCTION GUIDELINES 2.1 Credit Exposures
to Individual / Group Borrowers 2.2 Credit Exposure to Industry or
Certain Sectors 2.3 Banks' Exposure to Capital Market
Rationalisation of Norms 2.4 Financing of equities and investments
in shares 2.5 Risk Management and Internal Control System 2.6
Valuation and Disclosure 2.7 Cross holding of capital among banks /
financial institutions 2.8 Banks' Exposure to Commodity Markets
Margin Requirements 2.9 Limits on exposure to unsecured guarantees
and unsecured advances 2.10 'Safety Net' Schemes for Public Issues
of Shares, Debentures, etc. ANNEX Annex 1 Annex 2 Annex 3
3
Definition of infrastructure lending and list of items included
under infrastructure sector List of All-India Financial
Institutions guaranteeing bonds of corporate List of All-India
Financial Institutions whose instruments are exempted from Capital
Market Exposure ceiling List of circulars consolidated
4
Appendix
1 DBOD MC on Exposure Norms - 2012
1
INTRODUCTION As a prudential measure aimed at better risk
management and avoidance of concentration of credit risks, the
Reserve Bank of India has advised the banks to fix limits on their
exposure to specific industry or sectors and has prescribed
regulatory limits on banks exposure to individual and group
borrowers in India. In addition, banks are also required to observe
certain statutory and regulatory exposure limits in respect of
advances against / investments in shares, convertible debentures
/bonds, units of equity-oriented mutual funds and all exposures to
Venture Capital Funds (VCFs). Banks should comply with the
following guidelines relating to exposure norms.
2 2.1 2.1.1
GUIDELINES Credit Exposures to Individual/Group Borrowers
Ceilings
2.1.1.1 The exposure ceiling limits would be 15 percent of
capital funds in case of a single borrower and 40 percent of
capital funds in the case of a borrower group. The capital funds
for the purpose will comprise of Tier I and Tier II capital as
defined under capital adequacy standards (please also refer to
paragraph 2.1.3.5 of this Master Circular). 2.1.1.2 Credit exposure
to a single borrower may exceed the exposure norm of 15 percent of
the bank's capital funds by an additional 5 percent (i.e. up to 20
percent) provided the additional credit exposure is on account of
extension of credit to infrastructure projects. Credit exposure to
borrowers belonging to a group may exceed the exposure norm of 40
percent of the bank's capital funds by an additional 10 percent
(i.e., up to 50 percent), provided the additional credit exposure
is on account of extension of credit to infrastructure projects.
The definition of infrastructure lending and the list of items
included under infrastructure sector are furnished in Annex 1.
2.1.1.3 In addition to the exposure permitted under paragraphs
2.1.1.1 and 2.1.1.2 above, banks may, in exceptional circumstances,
with the approval of their Boards, consider enhancement of the
exposure to a borrower (single as well as group) up to a further 5
percent of capital funds subject to the borrower consenting to the
banks making appropriate disclosures in their Annual Reports.
2.1.1.4 With effect from May 29, 2008, the exposure limit in
respect of single borrower has been raised to twenty five percent
of the capital funds, only in respect of Oil Companies who have
been issued Oil Bonds (which do not have SLR status) by Government
of India. In addition to this, banks may in exceptional
circumstances, as hitherto, in terms of paragraph 2.1.1.3 of the
Master Circular, consider enhancement of the exposure to the Oil
Companies up to a further 5 percent of capital funds. 2.1.1.5 The
bank should make appropriate disclosures in the Notes on account to
the annual financial statements in respect of the exposures where
the bank had exceeded the prudential exposure limits during the
year.2 DBOD MC on Exposure Norms - 2012
2.1.1.6 Exposures to NBFCs The exposure (both lending and
investment, including off balance sheet exposures) of a bank to a
single NBFC / NBFC-AFC (Asset Financing Companies) should not
exceed 10% / 15% respectively, of the bank's capital funds as per
its last audited balance sheet. Banks may, however, assume
exposures on a single NBFC / NBFCAFC up to 15%/20% respectively, of
their capital funds provided the exposure in excess of 10%/15%
respectively, is on account of funds on-lent by the NBFC / NBFC-AFC
to the infrastructure sector. Exposure of a bank to Infrastructure
Finance Companies (IFCs) should not exceed 15% of its capital funds
as per its last audited balance sheet, with a provision to increase
it to 20% if the same is on account of funds on-lent by the IFCs to
the infrastructure sector. Further, banks may also consider fixing
internal limits for their aggregate exposure to all NBFCs put
together. Infusion of capital funds after the published balance
sheet date may also be taken into account for the purpose of
reckoning capital funds. Banks should obtain an external auditors
certificate on completion of the augmentation of capital and submit
the same to the Reserve Bank of India (Department of Banking
Supervision) before reckoning the additions to capital funds.
2.1.1.7 Lending under Consortium Arrangements The exposure limits
will also be applicable to lending under consortium arrangements.
2.1.1.8 Bills discounted under Letter of Credit (LC) In cases where
the bills discounting/purchasing/negotiating bank and LC issuing
bank are different entities, bills purchased/discounted/negotiated
under LC (where the payment to the beneficiary is not made under
reserve), will be treated as an exposure on the LC issuing bank and
not on the third party / borrower. However, in cases where the
bills discounting/purchasing/negotiating bank and LC issuing bank
are part of the same bank, i.e. where LC is issued by the Head
Office or branch of the same bank, then the exposure should be
taken on the third party/borrower and not on the LC issuing bank.
In the case of negotiations under reserve, the exposure should be
treated as on the borrower. 2.1.2 Exemptions
2.1.2.1 Rehabilitation of Sick/Weak Industrial Units The
ceilings on single/group exposure limits are not applicable to
existing/additional credit facilities (including funding of
interest and irregularities) granted to weak/sick industrial units
under rehabilitation packages. 2.1.2.2 Food credit Borrowers, to
whom limits are allocated directly by the Reserve Bank for food
credit, will be exempt from the ceiling. 2.1.2.3 Guarantee by the
Government of India The ceilings on single /group exposure limit
would not be applicable where principal3 DBOD MC on Exposure Norms
- 2012
and interest are fully guaranteed by the Government of India.
2.1.2.4 Loans against Own Term Deposits Loans and advances (both
funded and non-funded facilities) granted against the security of a
banks own term deposits may not be reckoned for computing the
exposure to the extent that the bank has a specific lien on such
deposits. 2.1.2.5 Exposure on NABARD The ceiling on single/group
borrower exposure limit will not be applicable to exposure assumed
by banks on NABARD. The individual banks are free to determine the
size of the exposure to NABARD as per the policy framed by their
respective Board of Directors. However, banks may note that there
is no exemption from the prohibitions relating to investments in
unrated non-SLR securities prescribed in terms of the Master
Circular on Prudential Norms for Classification, Valuation and
Operations of Investment Portfolio by Banks, as amended from time
to time. 2.1.3 Definitions
2.1.3.1 Exposure Exposure shall include credit exposure (funded
and non-funded credit limits) and investment exposure (including
underwriting and similar commitments). The sanctioned limits or
outstandings, whichever are higher, shall be reckoned for arriving
at the exposure limit. However, in the case of fully drawn term
loans, where there is no scope for re-drawal of any portion of the
sanctioned limit, banks may reckon the outstanding as the exposure.
2.1.3.2 Measurement of Credit Exposure of Derivative Products For
the purpose of exposure norms, banks shall compute their credit
exposures, arising on account of the interest rate & foreign
exchange derivative transactions and gold, using the 'Current
Exposure Method', as detailed below. While computing the credit
exposure banks may exclude 'sold options', provided the entire
premium / fee or any other form of income is received / realised.
Bilateral netting of Mark-To-Market (MTM) values arising on account
of such derivative contracts cannot be permitted. Accordingly,
banks should count their gross positive MTM value of such contracts
for the purposes of capital adequacy as well as for exposure norms.
Current Exposure Method (i) The credit equivalent amount of a
market related off-balance sheet transaction calculated using the
current exposure method is the sum of current credit exposure and
potential future credit exposure of these contracts. While
computing the credit exposure banks may exclude 'sold options',
provided the entire premium / fee or any other form of income is
received / realized. (ii) Current credit exposure is defined as the
sum of the positive mark-to-market value of these contracts. The
Current Exposure Method requires periodical calculation of the
current credit exposure by marking these contracts to market, thus
capturing the4 DBOD MC on Exposure Norms - 2012
current credit exposure. (iii) Potential future credit exposure
is determined by multiplying the notional principal amount of each
of these contracts irrespective of whether the contract has a zero,
positive or negative mark-to-market value by the relevant add-on
factor indicated below according to the nature and residual
maturity of the instrument.
CCF for market related off-balance sheet items Credit conversion
factors Residual Maturity One year or less Over one year to five
years Over five years Interest Rate Contracts 0.50% 1.00% 3.00%
Exchange Rate Contracts & Gold 2.00% 10.00% 15.00%
(iv) For contracts with multiple exchanges of principal, the
add-on factors are to be multiplied by the number of remaining
payments in the contract. (v) For contracts that are structured to
settle outstanding exposure following specified payment dates and
where the terms are reset such that the market value of the
contract is zero on these specified dates, the residual maturity
would be set equal to the time until the next reset date. However,
in the case of interest rate contracts which have residual
maturities of more than one year and meet the foregoing criteria,
the CCF or "add-on factor" applicable shall be subject to a floor
of 1.00 per cent. (vi) No potential future credit exposure would be
calculated for single currency floating / floating interest rate
swaps; the credit exposure on these contracts would be evaluated
solely on the basis of their mark-to-market value. (vii) Potential
future exposures should be based on effective rather than apparent
notional amounts. In the event that the stated notional amount is
leveraged or enhanced by the structure of the transaction, banks
must use the effective notional amount when determining potential
future exposure. For example, a stated notional amount of USD 1
million with payments based on an internal rate of two times the
BPLR would have an effective notional amount of USD 2 million.
2.1.3.3.Credit Exposure Credit exposure comprises the following
elements: (a) all types of funded and non-funded credit limits. (b)
facilities extended by way of equipment leasing, hire purchase
finance and factoring services.
5 DBOD MC on Exposure Norms - 2012
2.1.3.4 Investment Exposure a) Investment exposure comprises the
following elements: (i) investments in shares and debentures of
companies. (ii) investment in PSU bonds (iii)investments in
Commercial Papers (CPs). b) Banks / FIs investments in debentures/
bonds / security receipts / passthrough certificates (PTCs) issued
by an SC / RC as compensation consequent upon sale of financial
assets will constitute exposure on the SC / RC. In view of the
extraordinary nature of the event, banks / FIs will be allowed, in
the initial years, to exceed the prudential exposure ceiling on a
case-to-case basis. c) The investment made by the banks in bonds
and debentures of corporates which are guaranteed by a PFI 1 (as
per list given in Annex 2) will be treated as an exposure by the
bank on the PFI and not on the corporate. d) Guarantees issued by
the PFI to the bonds of corporates will be treated as an exposure
by the PFI to the corporates to the extent of 50 percent, being a
non-fund facility, whereas the exposure of the bank on the PFI
guaranteeing the corporate bond will be 100 percent. The PFI before
guaranteeing the bonds/debentures should, however, take into
account the overall exposure of the guaranteed unit to the
financial system. 2.1.3.5 Capital Funds Capital funds for the
purpose will comprise Tier I and Tier II capital as defined under
capital adequacy standards and as per the published accounts as on
March 31 of the previous year. However, the infusion of capital
under Tier I and Tier II, either through domestic or overseas issue
(in the case of branches of foreign banks operating in India,
capital funds received by them from their Head Office in accordance
with the provisions of Master Circular on New Capital Adequacy
Framework as amended from time to time), after the published
balance sheet date will also be taken into account for determining
the exposure ceiling. Other accretions to capital funds by way of
quarterly profits etc. would not be eligible to be reckoned for
determining the exposure ceiling. Banks are also prohibited from
taking exposure in excess of the ceiling in anticipation of
infusion of capital at a future date.
With the merger of ICICI Ltd. with ICICI Bank Ltd. effective
from 30.03.2002, the entire liabilities of ICICI Ltd. have been
taken over by ICICI Bank Ltd. As per the scheme of merger all loans
and guarantee facilities to ICICI Ltd. provided by Government would
be transferred to the merged entity. Similarly, the investments
made in erstwhile ICICI Ltd. by banks would be treated outside the
ceiling of 40% till redemption. With the merger of IDBI Bank Ltd.
with IDBI Ltd., effective April 2, 2005, the entire liabilities of
the erstwhile IDBI Bank Ltd. have been taken over by the new,
combined entity Industrial Development Bank of India Ltd., since
renamed as IDBI Bank Ltd. Therefore, for the purpose of exposure
norms, investments made by the banks in the bonds and debentures of
corporates guaranteed by the erstwhile IDBI Ltd. would continue to
be treated as an exposure of the banks on IDBI Ltd. and not on the
corporates, till redemption. Similarly, investments made in the
erstwhile IDBI Ltd. by banks would be treated as outside the
capital market exposure ceiling of 40%, till redemption.
1
6 DBOD MC on Exposure Norms - 2012
2.1.3.6 Group a) The concept of 'Group' and the task of
identification of the borrowers belonging to specific industrial
groups is left to the perception of the banks/financial
institutions. Banks/financial institutions are generally aware of
the basic constitution of their clientele for the purpose of
regulating their exposure to risk assets. The group to which a
particular borrowing unit belongs, may, therefore, be decided by
them on the basis of the relevant information available with them,
the guiding principle being commonality of management and effective
control. In so far as public sector undertakings are concerned,
only single borrower exposure limit would be applicable. b) In the
case of a split in the group, if the split is formalised the
splinter groups will be regarded as separate groups. If banks and
financial institutions have doubts about the bona fides of the
split, a reference may be made to RBI for its final view in the
matter to preclude the possibility of a split being engineered in
order to prevent coverage under the Group Approach. 2.1.4 Review An
annual review of the implementation of exposure management measures
may be placed before the Board of Directors before the end of June.
2.2. 2.2.1 Credit Exposure to Industry and certain Sectors Internal
Exposure Limits
2.2.1.1 Fixing of Sectoral Limits Apart from limiting the
exposures to an individual or a Group of borrowers, as indicated
above, banks may also consider fixing internal limits for aggregate
commitments to specific sectors, e.g. textiles, jute, tea, etc., so
that the exposures are evenly spread over various sectors. These
limits could be fixed by the banks having regard to the performance
of different sectors and the risks perceived. The limits so fixed
may be reviewed periodically and revised, as necessary. 2.2.1.2
Unhedged Foreign Currency Exposure of Corporates To ensure that
each bank has a policy that explicitly recognises and takes account
of risks arising out of foreign exchange exposure of their clients,
foreign currency loans above US $10 million, or such lower limits
as may be deemed appropriate vis--vis the banks portfolios of such
exposures, should be extended by banks only on the basis of a well
laid out policy of their Boards with regard to hedging of such
foreign currency loans. Further, the policy for hedging, to be
framed by their boards, may consider, as appropriate for
convenience, excluding the following: Where forex loans are
extended to finance exports, banks may not insist on hedging but
assure themselves that such customers have uncovered receivables to
cover the loan amount. Where the forex loans are extended for
meeting forex expenditure.
Banks are also advised that the Board policy should cover
unhedged foreign exchange exposure of all their clients including
Small and Medium Enterprises (SMEs). Further, for arriving at the
aggregate unhedged foreign exchange exposure of clients, their
exposure from all sources including foreign currency borrowings
and7 DBOD MC on Exposure Norms - 2012
External Commercial Borrowings should be taken into account.
Banks which have large exposures to clients should monitor and
review on a monthly basis, through a suitable reporting system, the
unhedged portion of the foreign currency exposures of those
clients, whose total foreign currency exposure is relatively large
( say, about US $ 25 million or its equivalent). The review of
unhedged exposure for SMEs should also be done on a monthly basis.
In all other cases, banks are required to put in place a system to
monitor and review such position on a quarterly basis. In the case
of consortium/multiple banking arrangements, the lead role in
monitoring unhedged foreign exchange exposure of clients, as
indicated above, would have to be assumed by the consortium
leader/bank having the largest exposure. Recent events relating to
derivative trades have shown that excessive risk taking by
corporates could lead to severe distress to them and large
potential credit loss to their bankers in the event of sharp
adverse movements in currencies. In view of the importance of
prudent management of foreign exchange risk, it has been decided
that banks, while extending fund based and non-fund based credit
facilities to corporates, should rigorously evaluate the risks
arising out of unhedged foreign currency exposure of the corporates
and price them in the credit risk premium. Further, banks may also
consider stipulating a limit on unhedged position of corporates on
the basis of bank's Board approved policy. Banks are also advised
to adhere to the instructions relating to information sharing among
themselves as indicated in our circular
DBOD.No.BP.BC.94/08.12.001/200809 dated December 8, 2008 on
'Lending under Consortium Arrangement / Multiple Banking
Arrangements'. 2.2.1.3 Exposure to Real Estate (i) Banks should
frame comprehensive prudential norms relating to the ceiling on the
total amount of real estate loans, single/group exposure limits for
such loans, margins, security, repayment schedule and availability
of supplementary finance and the policy should be approved by the
banks' Boards. (ii) While appraising loan proposals involving real
estate, banks should ensure that the borrowers have obtained prior
permission from government / local governments / other statutory
authorities for the project, wherever required. In order that the
loan approval process is not hampered on account of this, while the
proposals could be sanctioned in the normal course, the
disbursements should be made only after the borrower has obtained
requisite clearances from the government authorities. Banks' Boards
may also consider incorporation of aspects relating to adherence to
National Building Code (NBC) in their policies on exposure to real
estate. The information regarding the NBC can be accessed from the
website of Bureau of Indian Standards (www.bis.org.in). Banks
should also adopt the National Disaster Management Authority (NDMA)
guidelines and suitably incorporate them as part of their loan
policies, procedures and documentation. (iii) The exposure of banks
to entities for setting up Special Economic Zones (SEZs) or for
acquisition of units in SEZs which includes real estate would be
treated as8 DBOD MC on Exposure Norms - 2012
exposure to commercial real estate sector for the purpose of
risk weight and capital adequacy from a prudential perspective.
Banks would, therefore, have to make provisions, as also assign
appropriate risk weights for such exposures, as per the existing
guidelines. The above exposure may be treated as exposure to
Infrastructure sector only for the purpose of Exposure norms which
provide some relaxations for the Infrastructure sector. In this
connection, attention is invited to paragraph 3 of our circular
DBOD. BP.BC. No. 42/08.12.015/2009-10 dated September 9, 2009 .
(iv) While framing the bank's policy, the guidelines issued by the
Reserve Bank should be taken into account. Banks should ensure that
the bank credit is used for productive construction activity and
not for any activity connected with speculation in real estate.
2.2.2 Exposure to Leasing, Hire Purchase and Factoring Services
Banks have been permitted to undertake leasing, hire purchase and
factoring activities departmentally. Where banks undertake these
activities departmentally, they should maintain a balanced
portfolio of equipment leasing, hire purchase and factoring
services vis--vis the aggregate credit. Their exposure to each of
these activities should not exceed 10 percent of total advances.
2.2.3 Exposure to Indian Joint Ventures/Wholly-owned Subsidiaries
Abroad and Overseas Step-down Subsidiaries of Indian Corporates
2.2.3.1 Banks are allowed to extend credit/non-credit facilities
(viz. letters of credit and guarantees) to Indian Joint
Ventures/Wholly-owned Subsidiaries abroad and stepdown subsidiaries
which are wholly owned by the overseas subsidiaries of Indian
Corporates. Banks are also permitted to provide at their
discretion, buyer's credit/acceptance finance to overseas parties
for facilitating export of goods & services from India. 2.2.3.2
The above exposure will, however, be subject to a limit of 20
percent of banks unimpaired capital funds (Tier I and Tier II
capital), subject to the following conditions: i. ii. iii. Loan
will be granted only to those joint ventures where the holding by
the Indian company is more than 51%. Proper systems for management
of credit and interest rate risks arising out of such cross border
lending are in place. While extending such facilities, banks will
have to comply with Section 25 of the Banking Regulation Act, 1949,
in terms of which the assets in India of every banking company at
the close of business on the last Friday of every quarter shall not
be less than 75 percent of its demand and time liabilities in
India. The resource base for such lending should be funds held in
foreign currency accounts such as FCNR(B), EEFC, RFC, etc. in
respect of which banks have to manage exchange risk. Maturity
mismatches arising out of such transactions are within the overall
gap limits approved by RBI.9 DBOD MC on Exposure Norms - 2012
iv.
v.
vi.
Adherence to all existing safeguards / prudential guidelines
relating to capital adequacy, exposure norms etc. applicable to
domestic credit / noncredit exposures. The set up of the step-down
subsidiary should be such that banks can effectively monitor the
facilities granted by them.
vii.
2.2.3.3 Further, the loan policy for such credit / non-credit
facility should be, inter alia, in keeping with the following: (a)
Grant of such loans is based on proper appraisal and commercial
viability of the projects and not merely on the reputation of the
promoters backing the project. Non-fund based facilities should be
subjected to the same rigorous scrutiny as fund-based limits. (b)
The countries where the joint ventures / wholly owned subsidiaries
are located should have no restrictions applicable to these
companies in regard to obtaining foreign currency loans or for
repatriation, etc. and should permit nonresident banks to have
legal charge on securities / assets abroad and the right of
disposal in case of need. 2.2.3.4 Banks should also comply with all
existing safeguards/prudential guidelines relating to capital
adequacy, and exposure norms indicated in paragraph 2.1. 2.3 Banks
Exposure to Capital Markets Rationalisation of Norms As announced
in the Mid-Term Review of Annual Policy Statement for the year
20052006, the prudential capital market exposure norms prescribed
for banks have been rationalized in terms of base and coverage.
Accordingly, the existing guidelines on banks exposure to capital
markets were modified and the revised guidelines, which came into
effect from April 1, 2007, are as under. 2.3.1 Components of
Capital Market Exposure (CME) Banks' capital market exposures would
include both their direct exposures and indirect exposures. The
aggregate exposure (both fund and non-fund based) of banks to
capital markets in all forms would include the following: i. direct
investment in equity shares, convertible bonds, convertible
debentures and units of equity-oriented mutual funds the corpus of
which is not exclusively invested in corporate debt;
ii. advances against shares/bonds/debentures or other securities
or on clean basis to individuals for investment in shares
(including IPOs/ESOPs), convertible bonds, convertible debentures,
and units of equity-oriented mutual funds; iii. advances for any
other purposes where shares or convertible bonds or convertible
debentures or units of equity oriented mutual funds are taken as
primary security; iv. advances for any other purposes to the extent
secured by the collateral security of shares or convertible bonds
or convertible debentures or units of equity oriented mutual funds
i.e. where the primary security other than shares/convertible
bonds/convertible debentures/units of equity oriented mutual10 DBOD
MC on Exposure Norms - 2012
funds does not fully cover the advances; v. secured and
unsecured advances to stockbrokers and guarantees issued on behalf
of stockbrokers and market makers; vi. loans sanctioned to
corporates against the security of shares / bonds/ debentures or
other securities or on clean basis for meeting promoters
contribution to the equity of new companies in anticipation of
raising resources; vii. bridge loans to companies against expected
equity flows/issues; viii. underwriting commitments taken up by the
banks in respect of primary issue of shares or convertible bonds or
convertible debentures or units of equity oriented mutual funds.
However, with effect from April 16, 2008, banks may exclude their
own underwriting commitments, as also the underwriting commitments
of their subsidiaries, through the book running process for the
purpose of arriving at the capital market exposure of the solo bank
as well as the consolidated bank. The position in this regard would
be reviewed at a future date. ix. financing to stockbrokers for
margin trading; x. all exposures to Venture Capital Funds (both
registered and unregistered). 2.3.2 Irrevocable Payment Commitments
(IPCs) Banks issue Irrevocable Payment Commitments (IPCs) in favour
of stock exchanges on behalf of domestic mutual funds/FIIs to
facilitate the transactions done by these clients. In order to
protect the banks from the adverse movements in the equity prices
and the possibility of default by the clients, while ensuring that
there is no undue disruption in the functioning of the capital
market in the country, the following risk mitigation measures have
been prescribed which will be effective for the period beginning
November 1, 2010 until further review: i. Only those custodian
banks would be permitted to issue IPCs who have a clause in the
Agreement with their clients which gives them an inalienable right
over the securities to be received as payout in any settlement.
However, in cases where transactions are pre-funded i.e. there are
clear INR funds in the customers account and, in case of FX deals,
the banks nostro account has been credited before the issuance of
the IPC by custodian banks, the requirement of the clause of
inalienable right over the security to be received as payout in the
agreement with the clients will not be insisted upon. ii. The
maximum risk to the custodian banks issuing IPCs would be reckoned
at 50%, on the assumption of downward price movement of the
equities bought by FIIs/ Mutual Funds on the two successive days
from the trade date (T) i.e., on T+1 and T+2, of 20% each with an
additional margin of 10% for further downward movement. iii.
Accordingly the potential risk on T+1 would be reckoned at 50% of
the settlement amount and this amount would be reckoned as CME at
the end of T+1 if margin payment / early pay in does not come in.
iv. In case there is early pay in on T+1, there will be no Capital
Market exposure. By T+1, we mean end of day (EOD) as per Indian
Time. Thus, funds received after EOD as per Indian Time, will not
be reckoned as early pay-in on T+1. CME will have to be computed
accordingly. v. In case margin is paid in cash on T+1, the CME
would be reckoned at 50% of settlement price minus the margin paid.
In case margin is paid on T+1 by way of permitted securities to
FIIs / Mutual Funds, the CME would be reckoned at 50% of11 DBOD MC
on Exposure Norms - 2012
settlement price minus the margin paid plus haircut prescribed
by the Exchange on the securities tendered towards margin
payment.
vi. The IPC will be treated as a financial guarantee with a
Credit Conversion Factor(CCF) of 100. However, capital will have to
be maintained only on exposure which is reckoned as CME because the
rest of the exposure is deemed to have been covered by
cash/securities which are admissible risk mitigants as per Basel
II. Thus capital is to be maintained on the amount taken for CME
and the risk weight would be 125% thereon. 2.3.3 Limits on Banks
Exposure to Capital Markets
2.3.3.1 Statutory limit on shareholding in companies In terms of
Section 19(2) of the Banking Regulation Act, 1949, no banking
company shall hold shares in any company, whether as pledgee,
mortgagee or absolute owner, of an amount exceeding 30 percent of
the paid-up share capital of that company or 30 percent of its own
paid-up share capital and reserves, whichever is less, except as
provided in sub-section (1) of Section 19 of the Act. Shares held
in demat form should also be included for the purpose of
determining the exposure limit. This is an aggregate holding limit
for each company. While granting any advance against shares,
underwriting any issue of shares, or acquiring any shares on
investment account or even in lieu of debt of any company, these
statutory provisions should be strictly observed. 2.3.3.2
Regulatory Limit A Solo Basis The aggregate exposure of a bank to
the capital markets in all forms (both fund based and non-fund
based) should not exceed 40 per cent of its net worth (as defined
in paragraph 2.3.4), as on March 31 of the previous year. Within
this overall ceiling, the banks direct investment in shares,
convertible bonds / debentures, units of equity-oriented mutual
funds and all exposures to Venture Capital Funds (VCFs) [both
registered and unregistered] should not exceed 20 per cent of its
net worth. B Consolidated Basis The aggregate exposure of a
consolidated bank to capital markets (both fund based and non-fund
based) should not exceed 40 per cent of its consolidated net worth
as on March 31 of the previous year. Within this overall ceiling,
the aggregate direct exposure by way of the consolidated banks
investment in shares, convertible bonds / debentures, units of
equity-oriented mutual funds and all exposures to Venture Capital
Funds (VCFs) [both registered and unregistered] should not exceed
20 per cent of its consolidated net worth.Note For the purpose of
application of prudential norms on a group-wise basis, a
consolidated bank' is defined as a group of entities, which include
a licensed bank, which may or may not have subsidiaries.12 DBOD MC
on Exposure Norms - 2012
2.3.3.3 The above-mentioned ceilings (sub-paragraphs A and B)
are the maximum permissible and a banks Board of Directors is free
to adopt a lower ceiling for the bank, keeping in view its overall
risk profile and corporate strategy. Banks are required to adhere
the ceilings on an ongoing basis. 2.3.4 Definition of Net Worth Net
worth would comprise Paid-up capital plus Free Reserves including
Share Premium but excluding Revaluation Reserves, plus Investment
Fluctuation Reserve and credit balance in Profit & Loss
account, less debit balance in Profit and Loss account, Accumulated
Losses and Intangible Assets. No general or specific provisions
should be included in computation of net worth. Infusion of capital
through equity shares, either through domestic issues or overseas
floats after the published balance sheet date, may also be taken
into account for determining the ceiling on exposure to capital
market. Banks should obtain an external auditors certificate on
completion of the augmentation of capital and submit the same to
the Reserve Bank of India (Department of Banking Supervision)
before reckoning the additions, as stated above. 2.3.5 Items
excluded from Capital Market Exposure The following items would be
excluded from the aggregate exposure ceiling of 40 per cent of net
worth and direct investment exposure ceiling of 20 per cent of net
worth (wherever applicable) : i. Banks investments in own
subsidiaries, joint ventures, sponsored Regional Rural Banks (RRBs)
and investments in shares and convertible debentures, convertible
bonds issued by institutions forming crucial financial
infrastructure such as National Securities Depository Ltd. (NSDL),
Central Depository Services (India) Ltd. (CDSL), National
Securities Clearing Corporation Ltd. (NSCCL), National Stock
Exchange (NSE), Clearing Corporation of India Ltd., (CCIL), a
credit information company which has obtained Certificate of
Registration from RBI and of which the bank is a member, Multi
Commodity Exchange Ltd. (MCX), National Commodity and Derivatives
Exchange Ltd. (NCDEX), National Multi-Commodity Exchange of India
Ltd. (NMCEIL), National Collateral Management Services Ltd.
(NCMSL), National Payments Corporation of India (NPCI) and United
Stock Exchange of India Ltd. (USEIL) and other All India Financial
Institutions as given in Annex 3. After listing, the exposures in
excess of the original investment (i.e. prior to listing) would
form part of the Capital Market Exposure. Tier I and Tier II debt
instruments issued by other banks;
ii.
iii. Investment in Certificate of Deposits (CDs) of other banks;
iv. Preference Shares; v. Non-convertible debentures and
non-convertible bonds;
vi. Units of Mutual Funds under schemes where the corpus is
invested exclusively in debt instruments; vii. Shares acquired by
banks as a result of conversion of debt/overdue interest into13
DBOD MC on Exposure Norms - 2012
equity under Corporate Debt Restructuring (CDR) mechanism; viii
Term loans sanctioned to Indian promoters for acquisition of equity
in overseas joint ventures / wholly owned subsidiaries under the
refinance scheme of Export Import Bank of India (EXIM Bank). ix)
With effect from April 16, 2008, banks may exclude their own
underwriting commitments, as also the underwriting commitments of
their subsidiaries, through the book running process, for the
purpose of arriving at the capital market exposure of the solo bank
as well as the consolidated bank. (However, the position in this
regard would be reviewed at a future date). x.) Promoters shares in
the SPV of an infrastructure project pledged to the lending bank
for infrastructure project lending. 2.3.6 Computation of exposure
For computing the exposure to the capital markets, loans/advances
sanctioned and guarantees issued for capital market operations
would be reckoned with reference to sanctioned limits or
outstanding, whichever is higher. However, in the case of fully
drawn term loans, where there is no scope for re-drawal of any
portion of the sanctioned limit, banks may reckon the outstanding
as the exposure. Further, banks direct investment in shares,
convertible bonds, convertible debentures and units of
equity-oriented mutual funds would be calculated at their cost
price. 2.3.7 Intra-day Exposures At present, there are no explicit
guidelines for monitoring banks intra-day exposure to the capital
markets, which are inherently risky. It has been decided that the
Board of each bank should evolve a policy for fixing intra-day
limits and put in place an appropriate system to monitor such
limits, on an ongoing basis. The position will be reviewed at a
future date. 2.3.8 Enhancement in limits Banks having sound
internal controls and robust risk management systems can approach
the Reserve Bank for higher limits together with details thereof.
2.4 2.4.1 Financing of equities and investments in shares Advances
against shares to individuals Loans against security of shares,
convertible bonds, convertible debentures and units of equity
oriented mutual funds to individuals from the banking system should
not exceed the limit of Rs.10 lakh per individual if the securities
are held in physical form and Rs. 20 lakhs per individual if the
securities are held in demat form. Such loans are meant for genuine
individual investors and banks should not support collusive action
by a large group of individuals belonging to the same corporate or
their interconnected entities to take multiple loans in order to
support particular scrips or stockbroking activities of the
concerned firms. Such finance should be reckoned as an exposure to
capital market. Banks should formulate, with the approval of their
Board of Directors, a Loan Policy for granting advances to
individuals against shares, debentures, and bonds keeping in view
the RBI guidelines. As a prudential measure,14 DBOD MC on Exposure
Norms - 2012
banks may also consider laying down appropriate aggregate
sub-limits of such advances. 2.4.2 Financing of Initial Public
Offerings (IPOs) Banks may grant advances to individuals for
subscribing to IPOs. Loans/advances to any individual from the
banking system against security of shares, convertible bonds,
convertible debentures, units of equity oriented mutual funds and
PSU bonds should not exceed the limit of Rs.10 lakh for subscribing
to IPOs. The corporates should not be extended credit by banks for
investment in other companies IPOs. Similarly, banks should not
provide finance to NBFCs for further lending to individuals for
IPOs. Finance extended by a bank for IPOs should be reckoned as an
exposure to capital market. 2.4.3 Bank finance to assist employees
to buy shares of their own companies
2.4.3.1 Banks may extend finance to employees for purchasing
shares of their own companies under Employees Stock Option
Plan(ESOP)/ reserved by way of employees' quota under IPO to the
extent of 90% of the purchase price of the shares or Rs.20 lakh,
whichever is lower. Finance extended by banks for ESOPs/ employees'
quota under IPO would be treated as an exposure to capital market
within the overall ceiling of 40 per cent of their net worth. These
instructions will not be applicable for extending financial
assistance by banks to their own employees for acquisition of
shares under ESOPs/ IPOs, as banks are not allowed to extend
advances including advances to their employees / Employees' Trusts
set up by them for the purpose of purchasing their own banks'
shares under ESOPs / IPOs or from the secondary market. This
prohibition will apply irrespective of whether the advances are
secured or unsecured. 2.4.3.2 Banks should obtain a declaration
from the borrower indicating the details of the loans / advances
availed against shares and other securities specified above, from
any other bank/s in order to ensure compliance with the ceilings
prescribed for the purpose. 2.4.3.3 Follow-on Public Offers(FPOs)
will also be included under IPO.
2.4.4
Advances against shares to Stock Brokers & Market Makers
2.4.4.1 Banks are free to provide credit facilities to
stockbrokers and market makers on the basis of their commercial
judgment, within the policy framework approved by their Boards.
However, in order to avoid any nexus emerging between
inter-connected stock broking entities and banks, the Board of each
bank should fix, within the overall ceiling of 40 percent of their
net worth as on March 31 of the previous year, a subceiling for
total advances to i. ii. all the stockbrokers and market makers
(both fund based and non-fund based, i.e. guarantees); and to any
single stock broking entity, including its associates/
inter-connected companies.15 DBOD MC on Exposure Norms - 2012
2.4.4.2 Further, banks should not extend credit facilities
directly or indirectly to stockbrokers for arbitrage operations in
Stock Exchanges. 2.4.5 Bank financing to individuals against shares
to joint holders or third party beneficiaries While granting
advances against shares held in joint names to joint holders or
third party beneficiaries, banks should be circumspect and ensure
that the objective of the regulation is not defeated by granting
advances to other joint holders or third party beneficiaries to
circumvent the above limits placed on loans/advances against shares
and other securities specified above. 2.4.6 Advances against units
of mutual funds
While granting advances against units of mutual funds, the banks
should adhere to the following guidelines:i) The units should be
listed in the stock exchanges or repurchase facility for the units
should be available at the time of lending. ii) The units should
have completed the minimum lock-in-period stipulated in the
relevant scheme. iii) The amount of advances should be linked to
the Net Asset Value (NAV) / repurchase price or the market value,
whichever is less and not to the face value of the units. iv)
Advances against units of mutual funds (except units of exclusively
debt oriented mutual funds) would attract the quantum and margin
requirements as are applicable to advances against shares and
debentures. However, the quantum and margin requirement for loans/
advances to individuals against units of exclusively debt-oriented
mutual funds may be decided by individual banks themselves in
accordance with their loan policy. v) The advances should be
purpose oriented taking into account the credit requirement of the
investor. Advances should not be granted for subscribing to or
boosting up the sales of another scheme of a mutual fund or for the
purchase of shares/ debentures/ bonds etc. 2.4.7 Advances to other
borrowers against shares/debentures/bonds
2.4.7.1 The question of granting advances against primary
security of shares and debentures including promoters shares to
industrial, corporate or other borrowers should not normally arise.
However, such securities can be accepted as collateral for secured
loans granted as working capital or for other productive purposes
from borrowers other than NBFCs. In such cases, banks should accept
shares only in dematerialised form. Banks may accept shares of
promoters only in dematerialised form wherever demat facility is
available. 2.4.7.2 In the course of setting up of new projects or
expansion of existing business or for the purpose of raising
additional working capital required by units other than NBFCs,16
DBOD MC on Exposure Norms - 2012
there may be situations where such borrowers may not able to
find the required funds towards margin, in anticipation of
mobilising of long-term resources. In such cases, there would be no
objection to the banks obtaining collateral security of shares and
debentures by way of margin. Such arrangements would be of a
temporary nature and may not be continued beyond a period of one
year. Banks have to satisfy themselves regarding the capacity of
the borrower to raise the required funds and to repay the advance
within the stipulated period.2.4.8 Bank Loans for Financing
Promoters' Contributions
2.4.8.1 Loans sanctioned to corporates against the security of
shares (as far as possible, demat shares) for meeting promoters'
contribution to the equity of new companies in anticipation of
raising resources, should be treated as a banks investments in
shares which would thus come under the ceiling of 40 percent of the
bank's net worth as on March 31 of the previous year prescribed for
the banks total exposure including both fund based and non-fund
based to capital market in all forms. 2.4.8.2 These loans will also
be subject to individual/group of borrowers exposure norms as well
as the statutory limit on shareholding in companies, as detailed
above. 2.4.9 Bridge Loans
2.4.9.1 Banks have been permitted to sanction bridge loans to
companies for a period not exceeding one year against expected
equity flows/issues. Such loans should be included within the
ceiling of 40 percent of the banks net worth as on March 31 of the
previous year prescribed for total exposure, including both
fund-based and non-fund based exposure to capital market in all
forms. 2.4.9.2 Banks should formulate their own internal guidelines
with the approval of their Board of Directors for grant of such
loans, exercising due caution and attention to security for such
loans. 2.4.9.3 Banks may also extend bridge loans against the
expected proceeds of NonConvertible Debentures, External Commercial
Borrowings, Global Depository Receipts and/or funds in the nature
of Foreign Direct Investments, provided the banks are satisfied
that the borrowing company has already made firm arrangements for
raising the aforesaid resources/funds. 2.4.10 Investments in
Venture Capital Funds (VCFs) As announced in the Annual Policy
Statement for the year 2006-2007 and advised in our circulars
DBOD.BP.BC.84 & 27/21.01.002/2005-2006 dated May 25 and August
23, 2006 respectively, banks exposures to VCFs (both registered and
unregistered) will be deemed to be on par with equity and hence
will be reckoned for compliance with the capital market exposure
ceilings (both direct and indirect). 2.4.11 Margins on advances
against shares/ issue of guarantees A uniform margin of 50 per cent
shall be applied on all advances / financing of IPOs / issue of
guarantees on behalf of stockbrokers and market makers. A minimum
cash17 DBOD MC on Exposure Norms - 2012
margin of 25 per cent (within the margin of 50%) shall be
maintained in respect of guarantees issued by banks for capital
market operations. These margin requirements will also be
applicable in respect of bank finance to stock brokers by way of
temporary overdrafts for DVP transactions. 2.4.12 Disinvestment
Programme of the Government of India In the context of the
Government of Indias programme of disinvestments of its holdings in
some public sector undertakings (PSUs), banks can extend finance to
the successful bidders for acquisition of shares of these PSUs. If
on account of banks financing acquisition of PSU shares under the
Government of Indias disinvestment programmes, any bank is likely
to exceed the regulatory ceiling of 40 per cent of its net worth as
on March 31 of the previous year, such requests for relaxation of
the ceiling would be considered by RBI on a case by case basis,
subject to adequate safeguards regarding margin, banks overall
exposure to capital market, internal control and risk management
systems, etc. The relaxation would be considered in such a manner
that the banks exposure to capital market in all forms, net of its
advances for financing of acquisition of PSU shares, shall be
within the regulatory ceiling of 40 per cent. RBI would also
consider relaxation on specific requests from banks in the
individual / group credit exposure norms on a case by case basis,
provided that the banks total exposure to the borrower, net of its
exposure due to acquisition of PSU shares under the Government of
India disinvestments programme, should be within the prudential
individual/ group borrower exposure ceiling prescribed by RBI.
2.4.13. a. Financing for Acquisition of Equity in Overseas
Companies Banks may extend financial assistance to Indian companies
for acquisition of equity in overseas joint ventures / wholly owned
subsidiaries or in other overseas companies, new or existing, as
strategic investment, in terms of a Board approved policy, duly
incorporated in the loan policy of the banks. Such policy should
include overall limit on such financing, terms and conditions of
eligibility of borrowers, security, margin, etc. While the Board
may frame its own guidelines and safeguards for such lending, such
acquisition(s) should be beneficial to the company and the country.
The finance would be subject to compliance with the statutory
requirements under Section 19(2) of the Banking Regulation Act,
1949. b. Refinance Scheme of Export Import Bank of India Under the
refinance scheme of Export Import Bank of India (EXIM Bank), the
banks may sanction term loans on merits to eligible Indian
promoters for acquisition of equity in overseas joint ventures /
wholly owned subsidiaries, provided that the term loans have been
approved by the EXIM Bank for refinance. 2.4.14 Arbitrage
Operations Banks should not undertake arbitrage operations
themselves or extend credit facilities directly or indirectly to
stockbrokers for arbitrage operations in Stock Exchanges. While
banks are permitted to acquire shares from the secondary market,18
DBOD MC on Exposure Norms - 2012
they should ensure that no sale transaction is undertaken
without actually holding the shares in their investment accounts.
2.4.15 Margin Trading 2.4.15.1 Banks may extend finance to
stockbrokers for margin trading. The Board of each bank should
formulate detailed guidelines for lending for margin trading,
subject to the following parameters: (i) The finance extended for
margin trading should be within the overall ceiling of 40% of net
worth prescribed for exposure to capital market. (ii) A minimum
margin of 50 per cent should be maintained on the funds lent for
margin trading. (iii) The shares purchased with margin trading
should be in dematerialised mode under pledge to the lending bank.
The bank should put in place an appropriate system for monitoring
and maintaining the margin of 50% on an ongoing basis. (iv) The
banks Board should prescribe necessary safeguards to ensure that no
"nexus" develops between inter-connected stock broking entities/
stockbrokers and the bank in respect of margin trading. Margin
trading should be spread out by the bank among a reasonable number
of stockbrokers and stock broking entities. 2.4.15.2 The Audit
Committee of the Board should monitor periodically the banks
exposure by way of financing for margin trading and ensure that the
guidelines formulated by the banks Board, subject to the above
parameters, are complied with. Banks should disclose the total
finance extended for margin trading in the "Notes on Account" to
their Balance Sheet. 2.5. Risk Management and Internal Control
System Banks desirous of making investment in equity shares/
debentures, financing of equities and issue of guarantees etc.,
within the above ceiling, should observe the following guidelines:
2.5.1 (i) (ii) Investment Policy The banks should formulate
transparent policy and procedure for investment in shares etc.,
with the approval of their Board. The banks should build up
adequate expertise in equity research by establishing a dedicated
equity research department, wherever warranted by their scale of
operations. Investment Committee The decision in regard to direct
investment should be taken by an Investment Committee set up by the
banks Board. The Investment Committee should be held accountable
for all investments made by the bank.19 DBOD MC on Exposure Norms -
2012
2.5.2
2.5.3 (i) (ii)
Risk Management Banks should ensure that their exposure to
stockbrokers is well diversified in terms of number of broker
clients, individual inter-connected broking entities. While
sanctioning advances to stockbrokers, the banks should take into
account the track record and credit worthiness of the broker,
financial position of the broker, operations on his own account and
on behalf of clients, average turnover period of stocks and shares,
the extent to which brokers funds are required to be involved in
his business operations, etc. While processing proposals for loans
to stockbrokers, banks should obtain details of facilities enjoyed
by the broker and all his connected companies from other banks.
While granting advances against shares and debentures to other
borrowers, banks should obtain details of credit facilities availed
by them or their associates / interconnected companies from other
banks for the same purpose (i.e. investment in shares etc.) in
order to ensure that high leverage is not built up by the borrower
or his associate or inter-connected companies with bank finance.
Audit Committee The surveillance and monitoring of investment in
shares / advances against shares shall be done by the Audit
Committee of the Board, which shall review in each of its meetings,
the total exposure of the bank to capital market both fund based
and nonfund based, in different forms and ensure that the
guidelines issued by RBI are complied with and adequate risk
management and internal control systems are in place; The Audit
Committee shall keep the Board informed about the overall exposure
to capital market, the compliance with the RBI and Board
guidelines, adequacy of risk management and internal control
systems; In order to avoid any possible conflicts of interest, it
should be ensured that the stockbrokers as directors on the Boards
of banks or in any other capacity, do not involve themselves in any
manner with the Investment Committee or in the decisions in regard
to making investments in shares, etc., or advances against shares.
Valuation and Disclosure Equity shares in a banks portfolio - as
primary security or as collateral for advances or for issue of
guarantees and as an investment - should be marked to market
preferably on a daily basis, but at least on weekly basis. Banks
should disclose the total investments made in equity shares,
convertible bonds and debentures and units of equity oriented
mutual funds as also aggregate advances against shares in the Notes
on Account to their balance sheets.20 DBOD MC on Exposure Norms -
2012
(iii) (iv)
2.5.4 (i)
(ii)
(iii)
2.6
2.7 2.7.1
Cross holding of capital among banks / financial institutions
(i) Banks' / FIs' investment in the following instruments, which
are issued by other banks / FIs and are eligible for capital status
for the investee bank / FI, should not exceed 10 percent of the
investing bank's capital funds (Tier I plus Tier II): a. b. c. d.
e. Equity shares; Preference shares eligible for capital status;
Subordinated debt instruments; Hybrid debt capital instruments; and
Any other instrument approved as in the nature of capital.
(ii) Banks / FIs should not acquire any fresh stake in a bank's
equity shares, if by such acquisition, the investing bank's / FI's
holding exceeds 5 percent of the investee bank's equity capital.
(iii) It is clarified that a banks/FIs equity holdings in another
bank held under provisions of a Statute will be outside the purview
of the ceiling prescribed above. 2.7.2 Banks / FIs investments in
the equity capital of subsidiaries are at present deducted from
their Tier I capital for capital adequacy purposes. Investments in
the instruments issued by banks / FIs which are listed at paragraph
2.7.1(i) above, which are not deducted from Tier I capital of the
investing bank/ FI, will attract 100 percent risk weight for credit
risk for capital adequacy purposes. Margin Requirements A. Banks'
Exposure to Commodity Markets In terms of extant instructions,
banks may issue guarantees on behalf of share and stock brokers in
favour of stock exchanges in lieu of margin requirements as per
stock exchange regulations. While issuing such guarantees banks
should obtain a minimum margin of 50 percent. A minimum cash margin
of 25 percent (within the above margin of 50 percent) should be
maintained in respect of such guarantees issued by banks. The above
minimum margin of 50 percent and minimum cash margin requirement of
25 percent (within the margin of 50 percent) will also apply to
guarantees issued by banks on behalf of commodity brokers in favour
of the national level commodity exchanges, viz., National Commodity
& Derivatives Exchange (NCDEX), Multi Commodity Exchange of
India Limited (MCX) and National MultiCommodity Exchange of India
Limited (NMCEIL), in lieu of margin requirements as per the
commodity exchange regulations. B. Banks exposure in respect of
Currency Derivatives segment The provisions with respect to capital
market exposure including the related provisions with regard to
maintenance of 50% margin as well as intra-day monitoring are not
applicable to banks exposure to brokers under the currency
derivatives segment.21 DBOD MC on Exposure Norms - 2012
2.8
2.9 2.9.1
Limits on exposure to unsecured guarantees and unsecured
advances The instruction that banks have to limit their commitment
by way of unsecured guarantees in such a manner that 20 percent of
the banks outstanding unsecured guarantees plus the total of
outstanding unsecured advances do not exceed 15 percent of total
outstanding advances has been withdrawn to enable banks Boards to
formulate their own policies on unsecured exposures.
Simultaneously, all exemptions allowed for computation of unsecured
exposures also stand withdrawn. With a view to ensuring uniformity
in approach and implementation, unsecured exposure is defined as an
exposure where the realisable value of the security, as assessed by
the bank /approved valuers / Reserve Banks inspecting officers, is
not more than 10 percent, ab-initio, of the outstanding exposure.
Exposure shall include all funded and non-funded exposures
(including underwriting and similar commitments). Security will
mean tangible security properly charged to the bank and will not
include intangible securities like guarantees, comfort letters,
etc.
2.9.2
2.9.3. For determining the amount of unsecured advances for
reflecting in schedule 9 of the published balance sheet, the
rights, licenses, authorisations, etc., charged to the banks as
collateral in respect of projects (including infrastructure
projects) financed by them, should not be reckoned as tangible
security. Banks, may however, treat annuities under build-operate
transfer (BOT) model in respect of road/highway projects and toll
collection rights where there are provisions to compensate the
project sponsor if a certain level of traffic is not achieved, as
tangible securities, subject to the condition that banks right to
receive annuities and toll collection rights is legally enforceable
and irrevocable. 2.10 2.10.1 'Safety Net' Schemes for Public Issues
of Shares, Debentures, etc. 'Safety Net' Schemes Reserve Bank had
observed that some banks/their subsidiaries were providing buyback
facilities under the name of Safety Net Schemes in respect of
certain public issues as part of their merchant banking activities.
Under such schemes, large exposures are assumed by way of
commitments to buy the relative securities from the original
investors at any time during a stipulated period at a price
determined at the time of issue, irrespective of the prevailing
market price. In some cases, such schemes were offered suo motto
without any request from the company whose issues are supported
under the schemes. Apparently, there was no undertaking in such
cases from the issuers to buy the securities. There is also no
income commensurate with the risk of loss built into these schemes,
as the investor will take recourse to the facilities offered under
the schemes only when the market value of the securities falls
below the pre-determined price. Banks/their subsidiaries have
therefore been advised that they should refrain from offering such
Safety Net facilities by whatever name called.
22 DBOD MC on Exposure Norms - 2012
2.10.2 Provision of buy back facilities In some cases, the
issuers provide buy-back facilities to original investors up to Rs.
40,000/- in respect of non-convertible debentures after a
lock-in-period of one year, to provide liquidity to debentures
issued by them. If, at the request of the issuers, the banks or
their subsidiaries find it necessary to provide additional
facilities to small investors subscribing to new issues, such
buy-back arrangements should not entail commitments to buy the
securities at pre-determined prices. Prices should be determined
from time to time, keeping in view the prevailing stock market
prices for the securities. Commitments should also be limited to a
moderate proportion of the total issue in terms of the amount and
should not exceed 20 percent of the owned funds of the banks/their
subsidiaries. These commitments will also be subject to the overall
exposure limits which have been or may be prescribed from time to
time.
23 DBOD MC on Exposure Norms - 2012
ANNEX 1 The definition of infrastructure lending and the list of
the items included under infrastructure sector [paragraph 2.1.1.2]
Any credit facility in whatever form extended by lenders (i.e.
banks, FIs or NBFCs) to an infrastructure facility as specified
below falls within the definition of "infrastructure lending". In
other words, a credit facility provided to a borrower company
engaged in:o o o
developing or operating and maintaining, or developing,
operating and maintaining any infrastructure facility that is a
project in any of the following sectors, or any infrastructure
facility of a similar nature :
i. ii. iii. iv. v.
a road, including toll road, a bridge or a rail system; a
highway project including other activities being an integral part
of the highway project; a port, airport, inland waterway or inland
port; a water supply project, irrigation project, water treatment
system, sanitation and sewerage system or solid waste management
system; telecommunication services whether basic or cellular,
including radio paging, domestic satellite service (i.e., a
satellite owned and operated by an Indian company for providing
telecommunication service), Telecom Towers, network of trunking,
broadband network and internet services; an industrial park or
special economic zone ; generation or generation and distribution
of power including power projects based on all the renewable energy
sources such as wind, biomass, small hydro, solar, etc.
transmission or distribution of power by laying a network of new
transmission or distribution lines. projects involving
agro-processing and supply of inputs to agriculture; projects for
preservation and storage of processed agro-products, perishable
goods such as fruits, vegetables and flowers including testing
facilities for quality; educational institutions and hospitals.
laying down and / or maintenance of pipelines for gas, crude oil,
petroleum, minerals including city gas distribution networks. any
other infrastructure facility of similar nature.
vi. vii. viii. ix. x. xi. xii. xiii.
24 DBOD MC on Exposure Norms - 2012
ANNEX 2 List of All-India Financial Institutions (Counter party
exposure - List of institutions guaranteeing bonds of corporates)
[paragraphs 2.1.3.4(c)] 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
14. 15. Industrial Finance Corporation of India Ltd. Industrial
Investment Bank of India Ltd. Tourism Finance Corporation of India
Ltd. Risk Capital and Technology Finance Corporation Ltd.
Technology Development and Information Company of India Ltd. Power
Finance Corporation Ltd. National Housing Bank Small Industries
Development Bank of India Rural Electrification Corporation Ltd.
Indian Railways Finance Corporation Ltd. National Bank for
Agriculture and Rural Development Export Import Bank of India
Infrastructure Development Finance Company Ltd. Housing and Urban
Development Corporation Ltd. Indian Renewable Energy Development
Agency Ltd.
25 DBOD MC on Exposure Norms - 2012
ANNEX 3 List of All-India Financial Institutions [Investment in
equity/convertible bonds/ convertible debentures by banks List of
FIs whose instruments are exempted from Capital Market Exposure
ceiling] [paragraph 2.3.5 (i)] 1. Industrial Finance Corporation of
India Ltd. (IFCI) 2. Tourism Finance Corporation of India Ltd.
(TFCI) 3. Risk Capital and Technology Finance Corporation Ltd.
(RCTC) 4. Technology Development and Information Company of India
Ltd. (TDICI) 5. National Housing Bank (NHB) 6. Small Industries
Development Bank of India (SIDBI) 7. National Bank for Agriculture
and Rural Development (NABARD) 8. Export Import Bank of India (EXIM
Bank) 9. Industrial Investment Bank of India (IIBI) 10. Life
Insurance Corporation of India (LIC) 11. General Insurance
Corporation of India (GIC)
26 DBOD MC on Exposure Norms - 2012
Appendix List of Circulars consolidated by the Master Circular
on Exposure Norms Sr.No 1 Circular No.
DBOD.BP.BC.No.76/21.04.103/2011 -12 Date 02.02.2012 Subject Second
Quarter Review of Monetary Policy 2011-12 Unhedged Foreign Currency
Exposure of Corporates Banks Exposure to Capital Market-Issue of
Irrevocable payment Commitments(IPCs) Bills Discounted under Letter
of Credit (LC) Exposure Norms Banks Exposure to Capital
Market-Issue of Irrevocable payment Commitments(IPCs) Import of
Section 25 of the Banking Regulation Act, 1949 Para 2.2.3.2(iii) of
the MC on Exposure Norms dated July 1, 2010 modified National
Disaster Management Guidelines on Ensuring Disaster Resilient
construction of Buildings and Infrastructure Issue of Irrevocable
Payment Commitments(IPCs) to Stock Exchanges on behalf of Mutual
Funds(MFs) and Foreign Institutional Investors(FIIs) Banks Exposure
to Capital Market-Issue of Irrevocable payment Commitments(IPCs)
Banks Exposure to Capital Market-Issue of Irrevocable payment
Commitments(IPCs) Prudential Norms for OffBalance Sheet exposures
of Banks-Bilateral Netting of Counterparty Credit Exposures Banks
Exposure to Capital Market-Issue of Irrevocable Payment
Commitments(IPCs) Items excluded from CME
2
DBOD.Dir.BC.68/13.03.00/2011-12
27.12.2011
3 4
Mail Box Clarification DBOD.Dir.BC.43/13.03.00/2011-12
21.12.2011 31.10.2011
5
Mail Box Clarification
20.06 2011
6
DBOD.Dir.BC.No. 93/08.12.14/201011
12.05.2011
7
A.P. (DIR Series)Circular No. 54
29.04.2011
8
Mail Box Clarification
19.11.2010
9
DBOD.Dir.BC.52/13.03.00/2010-11
28.10.2010
10
DBOD.No.BP.BC.48/21.06.001/2010 -11
01.10.2010
11
DBOD.Dir.BC.46/13.03.00/2010-11
30.09.2010
12
DBOD. Dir. BC 41/13.03.00/2010-11
21.09.2010
27 DBOD MC on Exposure Norms - 2012
13
DBOD.Dir.BC.32/13.03.00/2010-11
30.07.2010
14
DBOD. Dir.BC.116/13.03.00/2009-10
30.06.2010
15 16 17
DBOD.No.BP.BC.96/08.12.014/2009 -10 Mail Box Clarification
DBOD.No.Dir.BC.74/21.04.172/2009 -10
23.04.2010 09.04.2010 12.02.2010
18
DBOD.Dir.BC.66/13.03.00/2009-10
23.12.2009
19
Mail Box Clarification dated
9.11.2009
20
DBOD.No.Dir.BC.139/13.03.00/2008 -09
25.06.2009
21 22
DBOD.No.BP.BC.125/21.04.048/200 8-09
DBOD.No.Dir.BC.119/13.03.00/2008 -09
17.04.2009 30.03.2009
23
DBOD. No. ir.BC.98/13.03.00/20082009
12.12.2008
24
DBOD.No.BP.BC.96/21.04.103/2008 -09
DBOD.No.Dir.BC.41/13.03.00/200809
10.12.2008
25
10.09.2008
Banks Exposure to Capital Market-Loans Extended by Banks to
Mutual Funds and Issue of Irrevocable Payment Commitments (IPCs
Banks Exposure to Capital Market-Loans Extended by Banks to Mutual
Funds and Issue of Irrevocable Payment Commitments (IPCs)
Prudential Norms on Advances to Infrastructure Sector Definition of
Infrastructure Lending Risk Weights and Exposure Norms in respect
of Bank Exposure to NBFCs categorized as 'Infrastructure Finance
Companies' Banks Exposure to Capital Market-Loans Extended by Banks
to Mutual Funds and Issue of Irrevocable Payment Commitments (IPCs)
Banks' Exposure towards Power Projects based on Renewable Energy
Sources Banks Exposure to Capital Market-Loans Extended by Banks to
Mutual Funds and Issue of Irrevocable Payment Commitments (IPCs)
Prudential Norms on Unsecured Advances Banks Exposure to Capital
Market-Loans Extended by Banks to Mutual Funds and Issue of
Irrevocable Payment Commitments (IPCs) Banks Exposure to Capital
Market-Loans Extended by Banks to Mutual Funds and Issue of
Irrevocable Payment Commitments (IPCs) Unhedged Foreign Exchange
Exposure of Clients - Monitoring by Banks Banks Exposure to Capital
Market-Loans Extended by Banks to Mutual Funds and Issue of
Irrevocable PaymentDBOD MC on Exposure Norms - 2012
28
26
DBOD.No.BP.BC.31/21.04.157/2008 -09
DBOD.No.Dir.BC.92/13.03.00/200708
08.08.2008
27
9.06.2008
28 29
DBOD. No.Dir.BC.87/13.27.00/200708 DBOD. No.
ir.BC.57/13.03.00/200708
29.05.2008 14.12.2007
Commitments (IPCs) Prudential Norms for Offbalance Sheet
Exposures of Banks Banks' Exposure to Capital Market - Loans
Extended by Banks to Mutual Funds and Issue of Irrevocable Payment
Commitments (IPCs) Exposure Norms Banks' Exposure to Capital Market
- Loans Extended by Banks to Mutual Funds and Issue of Irrevocable
Payment Commitments (IPCs) Financing of Infrastructure by the Banks
and Financial Institutions - Definition of 'Infrastructure Lending'
Annual Policy Statement for the Year 2007-08 - Extension of Credit
Facilities to Overseas Step-down Subsidiaries of Indian Corporates
Banks' Exposure to Commodity Markets - Margin Requirements Bank's
Exposure to Capital Markets - Rationalization of Norms Financial
Regulation of Systemically Important NBFCs and Banks' Relationship
with them Mid-Term Review of Annual Policy Statement for the year
2006-07 - Extension of Funded and Non-funded Credit Facilities to
Indian Joint Ventures (JVs) / Wholly Owned Subsidiaries (WOSs)
Abroad - Enhancement Banks' Exposure to Entities for Setting up
Special Economic Zones (SEZs) / Acquisition of Units in SEZs
Prudential Guidelines - Bank's Investment in Venture Capital Funds
(VCFs) Adherence to National Building Code (NBC) Specifications
Necessary for LendingDBOD MC on Exposure Norms - 2012
30
DBOD.No.BP.BC.52/21.04.048/2007 -08
30.11.2007
31
DBOD.No.IBD.BC.96/23.37.001/200 6-07
10.05.2007
32 33
DBOD. No. Dir..BC.51/13.03.00/2006-07
DBOD.No.Dir.BC.47/13.07.05/200607 DBOD.No.FSD.BC.46/24.01.028/200
6-07
09.01.2007 15.12.2006
34
12.12.2006
35
DBOD.No.IBD.BC.41/23.37.001/200 6-07
6.11.2006
36
DBOD.No.BP.BC.30/21.01.002/2006 -07
20.09.2006
37
DBOD.No.BP.BC.27/21.01.002/2006 -07
DBOD.No.BP.BC.1711/08.12.14/200 5-06
23.08.2006
38
12.06.2006
29
39
DBOD.No.BP.BC.84/21.01.002/2005 -06
25.05.2006
40 41 42
DBOD.No.BP.BC.73/21.03.054/2005 -06 DBOD
No.BP.BC.65/08.12..01/200506 DBOD.No.Dir.BC.51/13.07.05/200506
24.03.2006 1.03.2006 27.12.2005
43 44 45 46
DBOD.No.Dir.BC.93/13.07.05/200405
DBOD.No.Dir.BC.69/13.07.05/200405 DBOD.No.Dir.BC.64/13.07.05/200405
DBOD.No.Dir.BC.63/13.07.05/200405
07.06.2005 31.01.2005 27.12.2004 24.12.2004
Institutions Annual Policy Statement for the Year 2006-07 - Risk
Weight on Exposures to Commercial Real Estate and Venture Capital
Funds Bills discounted under LC-Risk Weight & Exposure Norms
Banks' Exposure to Real Estate Sector Guidelines for Bank Finance
to Employees / Employee Trusts for Purchasing Banks Own Shares
Financing of Acquisition of Equity in Overseas Companies Advances
against Units of DebtOriented Mutual Funds Bank Financing of
Equities and Investments in Shares Bank Finance to Assist Employees
to Buy Shares of their Own Companies Prudential Norms on Capital
Adequacy - Cross holding of Capital among Banks / Financial
Institutions Annual Policy Statement for the year 2004-05 -
Prudential Credit Exposure Limits by Banks Annual Policy Statement
for the year 2004-05 - Prudential Guidelines on Unsecured Exposures
Annual Policy Statement for the year 2004-05 : Guidelines on
Infrastructure Financing Bank Financing of Equities and Investments
in Shares Guidelines for Bank Finance to Assist Employees to buy
Shares of their own Companies Bank Financing of Equities and
Investments in Shares Mid-term Review of Monetary and Credit Policy
for the year 2003-04 - Unhedged Foreign Currency Exposures of
Corporate
47
DBOD.No.BP.BC.3/21.01.002/200405
06.07.2004
48
DBOD.No.BP.BC.100/21.03.054/200 3-04
DBOD.No.BP.BC.97/21.04.141/2003 -04
21.06.2004
49
17.06.2004
50
DBOD.No.BP.BC.92/21.04.048/2003 -04
DBOD.No.Dir.BC.86/13.07.05/200304 DBOD.No.Dir.BC.67/13.07.05/200304
DBOD.No.Dir.BC.61/13.07.05/200304
DBOD.BP.BC.51/21.04.103/2003-04
16.06.2004
51 52
18.05.2004 06.02.2004
53 54
03.01.2004 5.12.2003
30 DBOD MC on Exposure Norms - 2012
55
DBOD.No.BP.BC.96/21.04.048/2002 -03
23.04.2003
56
DBOD.No.IBS.BC.94/23.37.001/200 2-03
08.04.2003
57
DBOD.No.BP.BC.72/21.04.018/2002 -03
25.02.2003
58 59
DBOD.No.BP.BC.67/21.04.048/2002 -03
DBOD.No.FSC.BC.66/24.01.022/200 2-03
04.02.2003 31.01.2003
60
DBOD.No.Dir.BC.63/13.07.05/200203
DBOD.No.BP.BC.48/21.03.054/2002 -03 DBOD.No.BP.BC.17/21.04.137/2002
-03 DBOD.No.Dir.BC. 6/13.07.05/02-03
29.01.2003
Guidelines on Sale of Financial Assets to Securitization Company
(SC)/Reconstruction Company (RC) (Created under the Securitization
and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002) and Related Issues Extension of
Credit/Non-credit Facilities to Indian Joint Ventures (JVs)/Wholly
Owned Subsidiaries (WOSs) Abroad and Extension of Buyer's Credit
and Acceptance Finance to Overseas Parties by Banks in India
Guidelines for Consolidated Accounting and Other Quantitative
Methods to Facilitate Consolidated Supervision Guidelines on
Infrastructure Financing Public Issue of Shares and Debentures -
Underwriting by Merchant Banking Subsidiaries of Commercial Banks
Bank Financing of Equities and Investments in Shares Measurement of
Credit Exposure of Derivative Products Guidelines for Bank Finance
for PSU Disinvestments of Government of India Investment in
equities/bonds issued by All India Financial Institutions. Master
Circular Prudential Norms on capital adequacy. Financing of
infrastructure projects Limit on credit exposure to
Individual/group borrowers. Bank financing for margin trading.
Monetary and Credit Policy measures-unhedged foreign currency
exposure of corporates
61 62
13.12.2002 16.08.2002
63
22.07.2002
64 65 66 67 68
DBOD.BP.BC. 2/21.01.002/ 02-03 IECD no.16/08.12.01/2001-02
DBOD.BP.BC.47/21.03.54/2001-02 DBOD.BP.BC. 45/21.04.137/01-02
DBOD.BP.BC.37/21.04.103/2001-02
05.07.2002 20.02.2002 22.11.2001 15.11.2001 27.10.2001
31 DBOD MC on Exposure Norms - 2012
69 70 71 72 73 74 75 76
DBOD. BP.BC. 27/21.04.137/2001 DBOD No. BP.BC. 119/21.04.137/
2000-01 DBOD No. BP.BC.116/ 21.04.048/2000-01
DBOD.BP.BC.51/21.04.137/20002001 DBOD.No.BP.1577/21.03.054/2000
DBOD.No.BP.BC.121/21.04.124/ 99 DBOD.No.BP.BC.35/21.01.002/99
DBOD.No.Dir.BC.13/13.07.05/99
22.09. 2001 11.05.2001 02.05.2001 10.11.2000 24.01.2000
03.11.1999 24.04.1999 23.02.1999
77 78
DBOD.No.Dir.BC.2/13.07.05/99
DBOD.No.IBS.BC.104/23.37.001/9899
29.01.1999 12.11.1998
79 80
DBOD.No.BP.BC.103/21.01.002/ 98
DBOD.No.Dir.BC.90/13.07.05/98
31.10.1998 28.08.1998
81
DBOD.No.Dir.BC.78/13.07.05/98-99 dated
DBOD.No.Dir.BC.36/13.03.00/98 IECD.No.13/08.12.01/97-98
DBOD.No.Dir.BC.138/13.07.05/9798 DBOD.No.BP.BC.99/21.03.054/97
dated DBOD.No.Dir.BC.60/13.07.05/97
08.08.1998
82 83 84 85 86
29.04.1998 27.10.1997 21.10.1997 02.09.1997 28.05.1997
Bank financing for margin trading. Financing of Equities and
Investment in Shares. Monetary and Credit Policy Measures 2001-2002
Bank Financing of equities and investments in shares Prudential
Credit Exposure Limits Monetary and Credit Policy Measures.
Monetary and Credit Policy Measures. Investment in and Underwriting
of Shares and Debentures of Corporate Bodies. Bridge Loans
Extension of Credit/Non-Credit Facilities to Indian Joint
Ventures/Wholly-owned Subsidiaries Abroad and Extension of Buyer's
Credit and Acceptance. Monetary and Credit Policy Measures Bank
Finance against Shares and Debentures - Master Circular. Investment
in and Underwriting of Shares and Debentures of Corporate Bodies.
Monetary and Credit Policy Measures Grant of Bridge Loan Facility
by Banks Bridge Loans Limit on Credit Exposure to Individual /
Group Borrowers. Investment in and Underwriting of Shares and
Debentures of Corporate Bodies. Advances against Shares. Limits on
Credit Exposure to Individual/Group Borrowers Advances against
Security of Term Deposits. Limits on Credit Exposure to
Individual/Group Borrowers -
87 88
DBOD.No.Dir.BC.43/13.07.05/97 DBOD.No.Dir.BC.42/13.07.05/97
15.04.1997 15.04.1997
89
DBOD.No.BP.BC.161/21.03.054/96
19.12.199632
DBOD MC on Exposure Norms - 2012
90 91
DBOD.No.Dir.BC.148/13.07.05/96
DBOD.No.Dir.BC.145/13.07.05/96
18.11.1996 25.10.1996
92 93 94 95 96
DBOD.No.BP.BC.109/21.03.053/96 DBOD.No.IBS.BC.54/23.61.001/ 96
DBOD.No.BP.BC.13/21.01.002/96 DBOD.No.FSC.BC.86/24.01.001/9596
DBOD.No.Dir.BC.69/13.07.05/95
09.08.1996 18.04.1996 08.02.1996 17.08.1995 28.06.1995
97
DBOD.No.Dir.BC.38/13.07.05/95
04.04.1995
98 99
DBOD.IBS.BC.29/23.06.001/95 DBOD.No.28/13.07.05/95
20.03.1995 10.03.1995
100
DBOD.No.Dir.BC.1/13.07.05-95
06.01.1995
101
DBOD.No.Dir.BC.151/13.07.05/94
28.12.1994
102
DBOD.No.BP.BC.133/21.03.054/94
11.11.1994
103 104
DBOD.No.524/23.61.001/94-95 DBOD.No.Dir.BC.124/13.07.05/94
25.10.1994 22.10.1994
105
DBOD.No.BP.BC.97/21.01.023/94
19.08.1994
106
DBOD.No.Dir.BC.61/13.07.05/94
18.05.1994
107
DBOD.No.IBS.BC.52/23.01.001/94
04.05.199433
Advances against Security of Term Deposits. Investment in Bonds
Issued by Public Sector Undertakings. Investment in Shares and
Debentures of Corporate Bodies. Certificate of Deposits (CDs)
Scheme. Limits on Credit Exposures to Individual/Group Borrowers.
Capital Adequacy Measures. Commitments in respect of Underwriting,
etc. Obligations. Investment in and Underwriting of Shares and
Debentures of Corporate Bodies. Investment in and Underwriting of
Shares and Debentures of Corporate Bodies. Deployment of Foreign
Funds in Indian Business Investment in and Underwriting of Shares
and Debentures of Corporate Bodies. Guidelines for Bank Finance to
Assist Employees to Buy Shares of their Own Companies Ceiling on
Credit Exposure to Individual/Group Borrowers Investments in and
Underwriting of Bonds Issued by PSUs and Commercial Papers. Ceiling
on Credit Exposure to Individual/Group Borrowers Investments in and
Underwriting of Bonds Issued by PSUs and Commercial Papers Limits
on Credit Exposure to Individual/Group of Borrowers Investment in
and Underwriting of Shares and Debentures of Corporate Bodies.
Investment in and Underwriting of Shares and Debentures of
Corporate Bodies. Investment in and Underwriting of Shares and
Debentures of Corporate Bodies. Indian Investment in Foreign
DBOD MC on Exposure Norms - 2012
108
DBOD.No.BP.BC.36/21.03.054/ 94
30.03.1994
Ventures Financing Equity Participations. Investments in and
Underwriting of Bonds Issued by PSUs and Commercial Papers - Limits
on Credit Exposure to Individual/Group Borrowers Equipment Leasing,
Hire Purchase, Factoring, etc. Activities. Investments in and
Underwriting of Bonds Issued by PSUs and Commercial Papers.
Investment in and Underwriting of Shares and Debentures of
Corporate Bodies. Restrictions on Credit to Certain Sectors - Real
Estate Loans. Investments in and Underwriting of Bonds Issued by
PSUs and Commercial Papers Underwriting Activity Devolvement on
Underwriters. Group Approach. Group Accounts. Holdings of Corporate
Shares & Debentures and Public Sector Bonds. Rehabilitation of
Sick/Weak Industrial Units - Exemption of Individual Bank's
Exposure from the Application of Existing Ceilings Prescribed
Under. Bank Guarantee Scheme 'Safety Net' Schemes for Public Issues
of Shares, Debentures, etc. Commitments in respect of Public Issues
of Shares, Debentures, etc. Limits on Credit Exposures to
Individual/Group of Borrowers Investment in and Underwriting of
Shares and Debentures of Corporate Bodies Holdings of Corporate
Shares & Debentures and Public Sector Bonds. Investments in
Holdings of Public Sector Bonds.
109
DBOD.No.FSC.BC.18/24.01.001/ 9394
DBOD.No.Dir.BC.4/13.07.05-94
19.02.1994
110
25.01.1994
111
DBOD.No.Dir.BC.3/13.07.05-94
24.01.1994
112 113
DBOD.No.BP.BC.211/21.01.001-93
DBOD.No.Dir.BC.176/13.07.05-93
28.12.1993 11.10.1993
114 115 116 117
DBOD.No.Dir.BC.145/13.07.05/93 D.O.IECD.No.2/CMD.GA/Gen/92-93
IECD.No.7/CMD.GA/GEN/91-92 DBOD.No.Dir.BC.51/C.96(SD/PSB)90
IECD.No.IRD.24/IR-A/90-91
30.07.1993 04.07.1992 29.07.1991 26.11.1990
118
23.11.1990
119 120
DBOD.No.Dir.BC.35/C.96(Z)-90 DBOD.No.FSC.BC.27/C.469-89
22.10.1990 29.09.1989
121
DBOD.No.FSC.BC.26/C.469-89
29.09.1989
122 123
DBOD.No.BP.BC.132/66-89 DBOD.No.Dir.BC.103/C.347(PSB)89
DBOD.No.Dir.BC.85/C.347(PSB)-89
26.05.1989 03.04.1989
124
01.03.1989
125
DBOD.No.Dir.BC.153/C.347(PSB)88
18.06.198834
DBOD MC on Exposure Norms - 2012
126
DBOD.No.Dir.BC.106/C.96(S&D)-88
17.03.1988
127
DBOD.No.Dir.BC.91/C.347(PSB)-88
06.02.1988
128 129
DBOD.No.IBS.130/13-88 DBOD.No.Dir.BC.21/C.347(PSB)-87
20.01.1988 11.08.1987
130
DBOD.No.Dir.BC.61/C.347(PSB)-87
09.06.1987
131
DBOD.No.Dir.BC.60/C.347(PSB)-87
08.06.1987
132
DBOD.No.GC.BC.55/C.408C(P)-87
28.05.1987
133
DBOD.No.GC.BC.131/C.408C(P)-86
25.11.1986
134 135
DBOD.No.Sch.68/C.109-72 DBOD.No.666/C.96/(Z)-67 dated
3.5.1967
31.07.1972 03.05.1967
Guidelines for Bank Finance to Assist Employees to Buy Shares of
their Own Companies. Holdings of Corporate Shares & Debentures
and Public Sector Bonds. Financing of Indian Joint Ventures Abroad.
Investment in and Underwriting of Shares, Debentures and Public
Sector Bonds. Investment in and Underwriting of Shares and
Debentures of Corporate Bodies. Investment in and Underwriting of
Shares and Debentures of Corporate Bodies Investments in and
Underwriting of Bonds Issued by PSUs and Commercial Papers.
Investment in and Underwriting of Shares and Debentures of
Corporate Bodies. Bank Guarantee Scheme. Bank Guarantee Scheme
35 DBOD MC on Exposure Norms - 2012